How to overcome debt

Yesterday while walking on the treadmill, I was listening to Dodong Cacanando’s youtube video explaining how people are having a hard time financially because of debt or “utang” in Filipino.

It reminded me of some of the most painful experiences I’ve had in my life. Back in the early 2000’s when I first got a job, I used my new credit card to purchase a lot of things, not realizing that it is a trap. To cut the long story short, I got into credit card debt. It came to a point where I would do cash advance so that I would have the cash to pay for our apartment rental. It was then that I made a personal decision to change my ways. I enrolled in our company’s automatic savings plan where they deduct 2%-20% (depending on your choice) every month from your salary. It happens automatically. You won’t see it in your bank account anymore, until the day you withdraw from the savings account. That helped me build the habit of saving money.

Fast forward a year after, my sister got into an accident. I had to bring her to the hospital. When we arrived at the emergency room, the doctor gave me a list of medicines I need to buy. Immediately, I went to the ATM and withdrew money to pay for the medicines. Thank God, I was able to buy the medicines, and my sister eventually recovered from the accident. I felt relieved, but at the same time, it gave me a profound appreciation to the decision I made a year ago to save up money. I can’t imagine how difficult it would have been had I not made that decision which could have limited my options in helping buy my sister’s medicines. Thank God for second chances.

The habit of saving helped me set aside money for emergencies. I continued that habit and even increased my savings contribution from 2$ to 5%, and then to 10% a year after. When I got promoted, I increased that even further to the maximum percentage which is 20%. Eventually, when I decided to withdraw the amount to use it for my wedding expenses, it has already reached 6 figures. Imagine how much a measly 2% would grow to become a few years after.

When my wife and I went abroad, that habit of saving helped us as well. Eventually when we came back home, we had some savings that helped us transition our life back to the Philippines. We started our investing journey, for which this blog became a platform for me to share my stories and lessons I learned along the way.

I wish learning a habit would be that easy and that life would go on smoothly as we wish it to be. But it’s hardly the case.

A few years after coming back to the Philippines, my wife had a difficult pregnancy for both of our 2 sons. She had emergency Caesarian operation and was admitted to the hospital for close monitoring. Our first son, had to battle through right after he was born, and that’s when the greatest miracle in our lives happened. Recently, my son celebrated his 12th birthday. Everyday I thank God for giving us a chance to be a parent of our miracle child. A year after, my second son was born, also via Caesarian operation. My wife had to go through a lot of sacrifices giving birth to our sons and taking care of them. She resigned from her job, and became a full-time mom to our kids. She momentarily paused her career and focused on raising our boys.

During those days, I had a lot of realizations towards money. For one, truly you won’t understand how blessed you are until you receive something that money cannot buy. But for those things that money can buy, money is still very important. It was also during those early years becoming a parent that I was also starting and struggling to take my business off the ground. The stress of watching our savings slowly getting depleted. The challenge of providing financially for a young family. The self-doubt, the sleepless nights, and crying on your own at the corner begging God to help you overcome the challenges, those are the things that make you stronger in the long run. It is also for those reasons that you are blessed beyond measure, for you have a God that provides for everything that you need, and so much more.

During those times, I also contemplated on getting a job and going back to corporate. It was around 2 years of struggling in the business when I felt like giving up my business. I asked myself whether it was only personal pride that was preventing me to go back? Would pride help me provide for my son’s needs? If I ever need to choose between my pride vs my son’s, I would definitely choose to swallow my pride any time of the day. I did try to go back, but my heart was not into it. Eventually, I decided not to go back. And since I wasn’t going back anyway, I might as well make my business work. So I worked hard and prayed hard. Eventually, my efforts bore fruit and our business started growing. With the income from the business, I was able to sustain our young family’s needs. Eventually, my wife and I even won some awards in the process.

That went on for some time, until I had to take on another challenge.

Our business could not sustain the growth that it had. Eventually, my business stagnated, and I could not figure it out. There were a lot of challenges financially. In my role as one of the leaders of the team, a lot of people consulted me with their financial situations and how to handle them. It was easy for me to advise and give suggestions on how they could overcome it. I realized years after when I faced similar situations that it is not so easy when you’re the one’s facing the problem.

To cut the long story short, I got into a huge credit card debt. Way way bigger than I anticipated. Our business income dropped like a hot potato. But our expenses ballooned even more. The banks were calling me everyday, demanding me to pay it back. I could not sleep thinking about how I can solve my problem. I was paralyzed in fear. I could not think straight. I could not move.

All I could do was pray that one day my problem will go away. Eventually, around 1 year ago, I finally paid off ALL of my credit card debts. It was a huge relief that was lifted from my shoulders. I thank God everyday for helping me go through it all. Looking back, I can’t even credit myself for creating the solutions on how to solve my problem. It was just a decision I had to make in my life to pay for it no matter how long it would take. But I can’t thank God enough for helping me and giving me people like my wife who supported me every step of the way. If you are in a similar situation here are some things that have helped me:

  1. If you’re getting buried in debt, the first thing you need to do is to stop digging.

I had to get my head above water so to speak. I had to get hold of my cashflow. I had to stop and evaluate how much money was coming in and how much money was going out. My first goal was to get to a positive cashflow. Since the money coming in was cut into half, I had to find a way to cut my expenses into half. That means selling my Ford mustang, so that it would help lower my monthly expenses. With the help of my wife, we eventually were able to find a buyer. Thank God for these angels that helped us when we needed it most. I also called up the bank to restructure my credit card debt. I explained the situation to them and we came up with a pay plan that helped reduce our monthly payments. Eventually, after lowering our expenses even further, we managed to finally break even and get into positive cashflow. That helped us greatly mentally and emotionally. We felt like we could finally take a breather after a long long time.

2. Increase your income

This was also the main reason why I decided to go back to corporate after almost a decade of being out. It was a hard decision. There was an opportunity for me to go overseas but after discussing it with my wife, I decided to look for an opportunity in the country instead so that I get to spend my time with my family. I could not bear to be away from my family especially when the world has just gone through the worst of covid and the travel restrictions have yet to be lifted fully. Eventually my former employer gave me a chance to go back to corporate and start again. I am thankful for that chance, and I will always be grateful to my employer who first gave me my first stint in the corporate 20+ years ago and also gave me a chance to transition when I came back from abroad. With the salary I was getting, it helped me payoff my last credit card debt sooner, and also helped me start saving once again.

3. Build better money habits moving forward

Promise to never get yourself in huge credit card debt ever again.This is something I really decided to promise myself personally. Getting into credit card debt is no fun. I’ve had it twice already. In both times, I was able to survive it and managed to fully pay them off. However, I would not wish for anyone to go through it. It takes a lot of mental, emotional, psychological energy just to keep your sanity. Of course, you need a lot of prayers and spiritual support to overcome them for good. This is the main reason why I advocate building better money habits in your life. Building better habits is life being married to your wife. It takes a lot of effort. You have to nurture it. Everyday. If you don’t protect it, you can lose it. But the good news is that if you realize you’re financially struggling, it only takes a simple decision to stop, evaluate and start building better money habits (even how small you think it is – I started with 2%). Eventually, you’ll be surprised how far that simple decision to build that habit would take you. The good news is that once you’re able to pay off your debts, you can take the same habit and begin saving for your peace of mind. It gets even better because you no longer pay interest; the bank is now the one paying you that instead of the other way around. Cheers and let’s live life free from the bondage of debts!